Safety and Shipping 1912-2012: From Titanic to Costa Concordia

Executive
Summary
March
2012
This Executive Summary
highlights key findings
from a detailed report
prepared by Allianz
Global Corporate &
Specialty (AGCS), in
conjunction with the
Seafarers International
Research Centre of
Cardiff University. For a
copy of the full report
please visit
www.agcs.allianz.com
Allianz Global Corporate & Specialty www.agcs.allianz.com
Safety and Shipping 1912-2012:
From Titanic to Costa Concordia
An insurer’s perspective from Allianz Global Corporate & Specialty
Maritime safety affects everyone, from blue collar factory workers and
school children, to journalists and company chief executives. The global
population depends on a safe and efficient shipping trade network for
modern day living to continue unchecked. In the 100 years since the loss
of the RMS Titanic, the maritime industry has worked steadily to improve
safety performance so that the 23 million tonnes of cargo and 55,000
cruise passengers that travel by ship every day do so safely and efficiently
in the vast majority of cases.
Total losses - % of world fleet
1.0
0.8
0.6
0.4
0.2
0.97%
0.69%
0.47%
0.40%
0.15%
0.0
1910 1935 1960 1985 2009
Source: Calculated from Lloyd’s Register World
Casualty Statistics 1900-2010
At the turn of the twentieth century, one of the most
renowned shipping tragedies of all time occurred in the
midst of the Atlantic Ocean. In April 1912, the RMS Titanic,
the pride and joy of White Star Line, sank on her maiden
voyage from Southampton, UK to New York, USA. Titanic,
at the time the world’s largest passenger steamship,
struck an iceberg four days into the crossing and sank
to the ocean bed taking 1,513 lives. Since that human
tragedy, the maritime industry has actively endeavored
to improve safety records and it is no understatement to
say that shipping in 2012 is a far safer form of transport
for passengers, cargo, seafarers and ships. However,
notwithstanding these advances, significant challenges
remain as the recent Costa Concordia and Rabaul Queen
disasters have demonstrated.
No one separate development can be singled-out for
this progress: today’s safer shipping environment is
the culmination of a number of initiatives, research,
regulations, and innovations. The full report outlines
some of the major areas where the shipping industry has
benefitted from improvements, explains how shipping
in the twenty-first century is now safer than ever, and
reviews current and future challenges to maritime
safety. Perhaps of most interest are the emerging
challenges facing the industry. Key findings about future
challenges are listed overleaf.

Total losses by ship type: 2000-2010
(number of losses)
Tankers 121 7.6%
Bulk Carriers 120 7.6%
Cargo Vessels 706 44.5%
Containers 17 1.1%
Reefers 24 1.5%
Passengers/General Cargo 83 5.2%
Passenger Cruise 17 1.1%
Fishing 375 23.6%
Offshore Industry 20 1.3%
Other 103 6.5%
Source: Lloyd’s Register Fairplay, World Fleet Statistics 2000-2010
• Ship sizes have increased significantly, dwarfing the
Titanic in comparison. The largest modern container
ships, such as Maersk’s new Triple-E class, pose
challenges for insurers due to their sheer scale and
value. Other ships are pushing the design envelope,
breaking new ground in terms of design challenges
which has led to concerns about structural integrity.
• Cruise ships: Despite the strong passenger safety
record of the cruise industry, the modern trend towards
ultra-large cruise ships, carrying over 6,000 passengers,
poses new challenges, especially in terms of evacuation
and rescue in remote environments. The International
Maritime Organisation (IMO) has introduced regulations
addressing such risks, including proactive risk
management with improved fire safety systems and a
focus on the need for such vessels to be their ‘own best
lifeboat’ so that, in the event of a casualty, persons can
stay safely on board, as the ship proceeds to port.
• Training and labor: with increased cost pressure,
many ship-owners look to source crews from emerging
economies due to lower wage demands. Despite IMO
attention through international standards, training
regimes and assessment are not consistent and may
lead to variations in crew and officer competence.
• Crewing levels in a competitive industry continue
to pose risks, despite the greatly improved efficiency
of modern vessels, and may compromise margins of
safety. Some commentators regard minimum crewing
Safety & Shipping 1912-2012: Executive Summary
levels as too low, and point out they do not allow for
the inevitable extra tasks that 24 hour operations
require – with ‘human factor’ risks such as fatigue
being significant causes of accidents.
• Inadequate risk management is identified as a key
challenge which can be addressed through improved
safety management systems and processes.
• Piracy continues to threaten shipping, especially off
Somalia and the Horn of Africa where 28 ships were
attacked in 2011, with attacks also being seen in other
regions (such as West Africa). The economic impact of
piracy was estimated to be around $7 billion in 2011.
• Language barriers are also cited as potential risks,
given the dependence on English as the ‘language of the
seas’. With increasingly multi-national crews, concern
has been raised about communication in an emergency,
or even misunderstandings in routine operations.
• Arctic and Polar waters: climate change is opening
up access to previously impassable seaways, but
the development of new routes, such as the North
East Passage, pose great challenges in terms of ice
navigation, environmental concerns, and design
and construction demands, as well as emergency
procedures in extremely hostile environments.
• Poor enforcement & coordination: with a
complex regulatory environment, coordination of
such regulations needs to be improved. Despite an
alignment of objectives, individual enforcement
bodies do not always coordinate actions, nor is it easy
to enforce responsibility in the event of an incident.
• Bureaucracy is cited as a pressure on crews and
officers, diverting them from other tasks and
potentially compromising safety. This is compounded
by minimum crewing levels which place further
burdens on already hard-pressed crews. Allocating
responsibility for such matters, perhaps via a ‘purser’
role, could address this challenge.
• Fire remains a major on-board risk especially in
‘Ro-Ro’ ferries (with relatively open decking) and also
on passenger ships with increased ‘hotel’ services and
large passenger numbers.
While these emerging safety risks need to be addressed
to further improve incident records going forward, in its
review of safety improvements since the Titanic accident,
the report finds that much progress has been already
made in attending to safety issues.
2

Key facts and figures
Causes of total loss (2000-2010)
(number of losses)
Collision 190 12.0%
Contact 34 2.1%
Fire/Explosion 233 14.7%
Foundering 778 49.1%
Wrecked/Stranded 286 18.0%
Hull/Machinery 33 2.1%
Missing 6 0.4%
Other 26 1.6%
Source: Lloyd’s Register Fairplay, World Fleet Statistics 2000-2010.
Driving safety
Safety & Shipping 1912-2012: Executive Summary
• Despite a trebling of the world fleet to over 100,000 ships in 2010, and a total fleet tonnage now approaching 1 billion gross tonnes,
shipping losses have decreased significantly from 1 ship per 100 per year (1912) to 1 ship per 670 per year in 2009.
• World seaborne trade continues to grow rapidly, driven by globalization and supported by containerization, having trebled since 1970
to over 8.4 billion tonnes of cargo loaded per annum.
• Marine transport can be regarded as one of the safest means of passenger transport overall: in Europe, it is ranked after rail, air and bus/
coach as the fourth safest means, with far lower fatal accident rates than car, motorcycle, bicycle or walking.
• However, seafaring remains dangerous as a profession. While professional seafarer fatality rates have fallen – for example, in the UK
per 100,000 seafarer-years, from 358 (in 1919) to 11 in 1996-2005 – this fatality rate is still twelve times higher than in the general
workforce. Despite inconsistent data, other country statistics appear to be considerably higher: for example Hong Kong recorded 96 per
100,000 seafarers per annum for 1996-2005, and Poland a rate of 84 per 100,000 seafarers per annum for the same period.
• Most losses can be attributed to ‘human error’ – a broad category estimated to be responsible for between 75%-96% of marine
casualties. Pressures of competition (often shore-based) and fatigue are frequently cited as significant causes – a particular matter of
concern in busy shipping areas such as the Baltic where crews may have little time to rest between periods of duty.
• The most common primary causes of shipping losses are foundering (49% of losses), wrecking/stranding (18%) and fire/explosion
(15%) while hull or machinery failure only accounts for around 2% of losses.
• Dry (bulk) cargo vessels have higher than average loss rates (44% of losses, despite representing 20% of the world fleet by number).
Conversely, tankers, container vessels and offshore industry ships have relatively low loss rates.
• Shipping is highly concentrated into modern sea-lanes as vessels navigate between major ports to optimize efficiency. This results
in clustering of losses in certain key regions. Accident ‘black spots’ include South China, Indo-China, Indonesia and Philippines (17%
of losses in 2001-2011), followed by East Mediterranean and Black Sea (13%), and Japan, Korea and North China (12%). The seas
around the British Isles also show relatively high loss concentrations (8%).
Safety has improved through a combination of
technology, cultural and training improvements, and
regulations, as well as through new construction and
design techniques.
Additionally, past experience demonstrates that major
accidents have often been the catalysts for key changes: for
example, the International Convention for the Safety of Life at
Sea (SOLAS) of 1914 was spurred on by the loss of the Titanic.
A similar impact can be expected from the Costa Concordia
incident – just as we have previously seen with the Herald
of Free Enterprise (1987), the Exxon Valdez (1989), and the
Estonia (1994) losses, which drove the creation of Safety
Management Systems under the ISM Code.
3

Technology & design in focus
Technology has been a key driver of safety, from the
introduction of gyrocompasses and the first use of aviation
to spot icebergs in 1914 to the mandatory use of Electronic
Chart Display & Information Systems (ECDIS) in 2012.
Military innovations drove improvements in the
mid-20th century - for example, in Radar and in wireless
communications - while later technologies such as
Automatic Radar Plotting Aid (ARPA), Global Positioning
Systems (GPS) and Automatic Identification System
(AIS), have reduced accidents through greatly improving
‘situational awareness’ via increased access to real time
information.
In addition, search and rescue efforts are greatly assisted
by modern (satellite-assisted) location-finding technologies
such as radar transponders and distress beacons.
However, experts warn of dependence on single
technologies, citing examples where reliance on
technology has led to major incidents.
Improvements have also stemmed from changes in
construction and design processes. Ship building
techniques such as pre-fabrication and welding have
improved quality and structural integrity, while computer
aided design has radically speeded up the design process,
allowing modeling to replace physical trial and error.
Training & Culture
Over the past one hundred years, training has moved
from being localized and unregulated to a global footing
and is now subject to close international scrutiny. The
World fleet size by number of ships: 1900-2010
120,000
100,000
80,000
60,000
40,000
20,000
0
1900
1910
30,058
1910
1920
1935
30,979
1930
1940
1950
1960
36,311
1960
1970
1985
76,395
1980
1990
2000
2010
103,392
2010
Source: Lloyd’s Register Fairplay, World Fleet Statistics 1900-2010
Standards of Training Certification and Watch-keeping
for Seafarers Convention (STCW) in 1978 established
international benchmarks in this area – and has since
been enforced by the IMO through publishing its ‘White
List’ of countries which comply with these standards.
Safety Management Systems have also driven an
increased safety culture, in part arising from the failures
of the previous piecemeal approach highlighted in the
aftermath of the Herald of Free Enterprise disaster in
1987. Spurred by this accident, the International Safety
Management Code (ISM Code), which the IMO adopted
in 1993, has driven best practice to be more widely
accepted and institutionalized in the industry.
However, inadequate risk management remains a
challenge – with one survey attributing this as a main or
contributing factor in nearly 40% of accidents.
Regulation
Safety & Shipping 1912-2012: Executive Summary
The maritime industry is now highly regulated, with a
large number of organizations responsible for different
facets of safety. However, it is the primary body, the IMO,
formed in 1948, as a United Nations agency, which has
driven much international regulation.
Prior to the IMO’s formation, the first SOLAS convention
was driven by the loss of the Titanic, and on being
adopted by its international signatories in 1914 formed a
landmark treaty on marine safety. Subsequent revisions,
combined with other key IMO conventions such as the
International Regulations for Preventing Collisions at
Sea (COLREG) and the International Convention on
Loadlines, have further tightened safety rules.
Such regulations have not simply reduced the risk of
accidents; they have also addressed the challenges of
responding to an accident with, for example, the Global
Maritime Distress and Safety System (1999) establishing
improved global procedures for search and rescue.
The industry itself has also played an active part in selfregulating
to improve standards: for example, oil tanker
owners have set higher standards since environmental
disasters such as the Exxon Valdez by tightening risk
management procedures and establishing vetting
systems, forcing others to adopt similar safety standards.
4

Copyright © 2012 Allianz
Global Corporate &
Specialty AG. All rights
reserved.
The material contained
in this publication is
designed to provide
general information only.
While every effort has
been made to ensure
that the information
provided is accurate,
this information is
provided without any
representation or
warranty of any kind
about its accuracy and
Allianz Global Corporate
& Specialty cannot be
held responsible for any
mistakes or omissions.
Quality control and enforcement
Working with the IMO, Members States check
operational safety at ports around the world through the
Port State Control (PSC) system.
Established under the STCW convention in 1978,
national PSC can inspect and detain shipping when
necessary to enforce standards. The results of
inspections are published freely online, creating
considerable transparency in this process.
While the number of inspections has increased with
increased trade, detentions have notably decreased: in
the Asia Pacific region, inspections increased by 48%
from 2001-2010, but detentions dropped by 5%.
Flag States further support the global enforcement
of IMO legislation. Flag states are those under whose
national flag a ship sails, and on whose register of
shipping each vessel is recorded.
However, “open registries” or “Flags of Convenience”
have also emerged since the 1950s, and some have
attracted criticism for a perceived relaxation of
regulatory control, either through non-ratification of
legislation, or non-enforcement of ratified legislation.
Contact us
Classification Societies offer another important element
to maintaining safety standards. These independent
bodies develop and apply technical standards to ship
design and construction. They have, however, been
subject to criticism for failing on occasion to spot
potential technical weaknesses in advance and, more
recently, when some Societies have started to enter into
ship design services – a move that has raised concerns
in respect of conflicts of interest when the Societies
may classify the very ships they have themselves
designed. However, other commentators refer to the
improvements in ship safety that have been achieved
through the design contributions of some Societies.
Marine insurers such as AGCS should also contribute
through transparent underwriting and dialogue with
ship-owners, supported by proactive risk consulting to
reduce risk in advance. Insurers can encourage best
practice in marine operations, recognizing the efforts of
leading ship-owners to reduce risk – for the benefit of all
parties.
For more information or for a copy of the full report, please contact your local Allianz Global Corporate & Specialty
Communications team, or visit the AGCS website.
London
Hugo Kidston
hugo.kidston@allianz.com
+44 (0)203 451 3891
Jonathan Tilburn
jonathan.tilburn@allianz.com
+44 (0)203 451 3128
Munich
Heidi Polke
heidi.polke@allianz.com
+49 89 3800 14303
Singapore
Wendy Koh
wendy.koh@allianz.com
+65 6395 3796
Allianz Global Corporate & Specialty (AGCS) consists of various legal companies operating under the Allianz Global Corporate & Specialty brand, namely Allianz Global Corporate & Specialty AG, Allianz Global Corporate &
Specialty (France), Allianz Global Corporate & Specialty North America (legal name Allianz Global Risks US Insurance Company) and AGCS Marine Insurance Company.
Allianz Global Corporate & Specialty AG, Fritz-Schaeffer-Strasse 9, 81737 Munich, Germany. London Branch: Allianz Global Corporate & Specialty AG, 60 Gracechurch Street, London EC3V 0HR
Paris
Isabelle Caminade
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+33 (0) 1 58 85 97 22
New York
Safety & Shipping 1912-2012: Executive Summary
Jacqueline Maher
jacqueline.maher@agcs.allianz.com
+1 646 472 1479
www.agcs.allianz.com